Demand Clause

A demand clause found in a note give a lender the right to demand full repayment of the loan balance without requiring any conditions to be met.

For a lender a demand clause will be preferred to an acceleration clause as it give them more power and control over the borrower’s credit facility.

In fact, it’s not far fetch to suggest that this is as good as absolute power.

On the other hand, a borrower will no doubt prefer acceleration clauses as a demand clause would leave them vulnerable to the mood of the lender.

While it is almost unheard of for a lender to demand full repayment of a mortgage for no apparent reason, a homeowner leaving himself open to such attacks is ridiculous.

The Truth in Lending Disclosure, which a borrower will receive, will reveal whether a loan has a demand clause.

If the presence of the clause is declared, you should definitely ask more questions about it.